CEBA loans that did not qualify for the extension

On January 2, 2023, the CEBA website was updated to provide the following comment:

Loan Holders that did not qualify for the new extended term were required to repay the outstanding amount of their CEBA Loan(s), in full, by December 31, 2023. This deadline has now passed, Loan Holders with outstanding balances as of January 1, 2024, will be contacted by their financial institution to request a lump sum repayment of the outstanding debt. If, at that point, they do not fully repay their CEBA loan to their financial institution, the financial institution will likely be required to assign their loan to the government’s CEBA Program for collection efforts.

The following question and answer was also provided:

What happens if I was deemed ineligible for the CEBA loan I received and informed that I am required to repay my loan in full by December 31, 2023, but I cannot repay by that date?

If you are unable to repay by December 31, 2023, your loan may be assigned to the government’s CEBA Program for collection efforts in spring of 2024. If your loan is assigned to the CEBA Program, you will be offered appropriate leniency on your repayment schedule. The CEBA Program will conduct a case-by-case review and could offer repayment flexibilities based on your ability to repay, such as an up to two-year repayment arrangement.

Watch! Life in the Tax Lane - January 2024

This FREE 10-minute video for Canadian Tax Professionals includes rapid-fire discussion of select recent developments in the wonderful world of Canadian tax presented by the Video Tax News Team. 

Topics:

• Pre-Budget Consultations

• Canada Dental Care Plan

• Electronic Distribution – T-slips

• Cryptocurrency and NFTs

• Working From Home Expenses – Employees

• Expanded Trust Reporting – CRA Guidance

Program Recorded: December 20, 2023.

Life in the Tax Lane is for general information purposes only and deals with dynamic, time-sensitive and complex matters that may not apply to particular facts and circumstances. The information provided should not be relied upon as a substitute for specialized professional advice in connection with any particular matter. For more information visit videotax.com/disclaimer. ©Video Tax News Inc. 2023, All Rights Reserved.

CEBA question re. financing added

The following question and answer was added to the CEBA website:

What are the requirements for a refinancing application on or before January 18, 2024 to qualify for the extended forgiveness deadline of March 28, 2024?

If you are an eligible loan holder in good standing and you apply to refinance your CEBA loan at the same financial institution that originally provided your CEBA loan on or before January 18, 2024, you can qualify for partial loan forgiveness if the outstanding principal of your CEBA loan, other than the amount available to be forgiven, is repaid on or before March 28, 2024. This does not prevent you from also applying for refinancing with other lenders—as long as you applied for refinancing at the same financial institution that originally provided your CEBA loan and your CEBA loan is repaid by March 28, 2024, you can qualify for partial loan forgiveness.

To submit a refinancing application, please contact the financial institution that provided your CEBA loan for more details on the refinancing options available to you and their application processes. In order to provide you with flexibility to find the most suitable refinancing solution for your situation, the CEBA Program does not limit the loan type or terms that qualify as a refinancing application. As such, a range of potential refinancing solutions may be offered by your financial institution, including applying for or requesting new credit or making or requesting changes to an existing credit facility for the purpose of repaying your CEBA loan. Refinancing products provided by financial institutions are conventional loans between you and your financial institution. They are underwritten using the standard lending practices of your financial institution and are not affiliated with the CEBA Program or the Government of Canada.

Please note that if your CEBA loan is outstanding on January 19, 2024, interest at a rate of 5% per annum will commence, even if you applied for refinancing on or before January 18, 2024 and are waiting for your refinancing application to be reviewed or the proceeds of an approved refinancing loan to be funded or applied to your CEBA loan balance.

If you are considering applying for refinancing, don’t leave it to the last minute. Financial institutions are likely to receive a large volume of CEBA refinancing applications. Make sure you apply on or before January 18, 2024.

Watch! Life in the Tax Lane - December 2023

This FREE 10-minute video for Canadian Tax Professionals includes rapid-fire discussion of select recent developments in the wonderful world of Canadian tax presented by the Video Tax News Team. 

Sources:

• Fall Economic Statement – Short-Term Rentals and Employee Ownership Trusts 

• Fall Economic Statement – Underused Housing Tax (UHT) – Source 1 and Source 2

• Various Trust Filing Issues – Source 1, Source 2 and Source 3

• Various Trust Filing Issues – Late Breaking Release

• Personal Indexation Amounts for 2024

• Canada Pension Plan

• T4/T4A Filing Requirements – Dental Benefits

• Overlooked Capital Losses

Program Recorded: November 24, 2023.

Life in the Tax Lane is for general information purposes only and deals with dynamic, time-sensitive and complex matters that may not apply to particular facts and circumstances. The information provided should not be relied upon as a substitute for specialized professional advice in connection with any particular matter. For more information visit videotax.com/disclaimer. ©Video Tax News Inc. 2023, All Rights Reserved.

Personal services businesses (PSBs) - pilot project continuation

This morning, CRA released the results from Phase 1 of its PSB pilot project that ended in December of 2022. Some notes:

• Of the 2,100 corporations that participated, just over 10% were likely to be utilizing PSBs.

• 64% of potential PSBs were incorrectly claiming the small business deduction (SBD)., which they are not eligible for as a PSB. This would have resulted in an average of $16,711 more in corporate tax.

• Nearly 74% of the potential PSBs identified work in 3 sectors/industries:

  • Transportation and warehousing (35%),

  • Professional, scientific and technical services (26%), and

  • Construction (13%).

Phase 1 focused on entities engaging PSBs. Phase 2, running from October 2023 to June 2024, will target PSBs directly. The review will examine the 2022 tax year. The purpose of the phase is to gather more information and provide education. Phase three (no timeline set) will continue to focus on education but will also include assisted compliance.

For more information, click here.